Tax bill, crappy economy pulled down bottom line

Specialist Computer Holdings – parent of reseller SCC and distributor SDG – pushed up sales in the year ended 31 March 2011, but the biting economy and the payment of a disputed tax bill dampened profits.

Group sales at the channel behemoth went up 11 per cent to £2.48bn but operating profits fell 2.1 per cent to £22.9m, while profit before tax sunk more than 17 per cent to £14.5m after £3.7m of exceptional charges.

Included in the charges, the firm coughed up £2.3m to HMRC as the "settlement of a long standing dispute with UK tax authorities", took £874,000 on the nose for UK restructuring costs and £371,000 for re-jigging its Dutch and Spanish operations.

During the fiscal year, the Rigby dynasty, owners of the privately owned SCH group, brought together all IT and non-IT investments (hotels and Coventry Airport) under Rigby Family Holdings which acquired the entire share capital of SCH.

In fiscal 2011 – following a trend in recent years – SCH paid out a dividend of £12.5m, leaving a retained group loss of £1.1m. Despite this the balance sheet remained solid with net assets increasing to £141.4m.

"Despite trading conditions that remain highly challenging, our strategy of continued expansion and development has continued to deliver results across the board," said Sir Peter Rigby, SCH chairman, in a statement sent to El Reg.

"Careful planning, shrewd financial expertise and disciplined leadership have all contributed to make this another successful year for the group at a time when many businesses are struggling against multiple adverse trends," he added.

Cash flow before financing was £6.2m compared to £24.8m a year earlier and net debt fell 20 per cent to £37.9m, primarily due to cash generated from operations.

Turnover from the combined reselling and distribution businesses in the UK grew 15.7 per cent to £1bn, for the first time in the firm's history but the increased charges meant operating profits fell 19 per cent to £6.67m.

Rigby revealed services sales in the UK grew 3.5 per cent to £112m, representing nearly 20 per cent of SCC's revenues. He also pointed to "substantial new business wins" in the current fiscal year ended next March. No reference was made to hardware sales.

Across the operations in continental Europe – France, Spain and Romania – sales climbed 8 per cent to £1.49bn but operating profits fell 11.4 per cent to £18.5m.

In the year, the group acquired UK integrator Kavanagh, managed print services minnow Technical Support Group and French reseller Ares.

Rigby said in a statement accompanying the results: "Despite the challenging economic pressures, the group has continued to make and deliver long term investments for growth in infrastructure, skills and innovative services acquisitions."

He added: "Whilst economic conditions remain uncertain, the directors do not feel the general level of activity in the next financial year to be materially different from the year ended 31 March 2011". ®